Portfolio

Some transaction participants appear to be rushing to market questionable Build America Bond, bank-qualified or other municipal bond deals before tax incentives expire at the end of the year and risking Internal Revenue Service enforcement action for violations of tax requirements, according to market sources.

Investors continued to ferry cash out of their municipal bond mutual funds at historic rates last week as a tumultuous sell-off sowed fear among buyers.

Morningstar said investors pulled $7.6 billion from muni bond funds, the category’s worst month for outflows except for the $8 billion redeemed in October 2008 during the credit crisis peak.

ETF assets reach $887.2 billion.

Fixed-income investors are exercising patience these days, with slow-moving rates that are expected to edge up slightly in 2011.

The Conference Board Leading Economic Index for the U.S. increased 1.1% in November to 112.4, following a 0.4% increase in October and a 0.6% increase in September.

While the occasional active investor/mutual fund will beat the market over time, the odds are weighted powerfully against that happening.

Employers are clearly more optimistic about the economy, for another 40% that had suspended 401(k) contributions will resume them by mid 2011, doubling the 40% that already have resumed suspended or reduced matches, the Profit Sharing/401(k) Council of America announced Friday.

Rollovers into traditional IRAs occur evenly across all age groups and play a significant role in the growth of IRA assets, according to research by the Investment Company Institute and the Securities Industry and Financial Markets Association, released Thursday.

Tax-exempt money market funds lost a sizable $2.09 billion, dropping total net assets to $326.88 billion for the week ending Dec. 13 and erasing nearly all gains from the previous week, according to the Money Fund Report, a service of iMoneyNet.com.